American Woodmark Corporation

Good day, and welcome to the American Woodmark Corporation First Fiscal Quarter 2025 Conference Call. Today's call is being recorded August 27th of 2024. During this call, the company may discuss certain non-GAAP financial measures, including in our earnings release, such as adjusted net income, adjusted EBITDA, adjusted EBITDA margin, free cash flow, net leverage, and adjusted EPS per diluted share. The earnings release, which can be found on our website, americanwoodmark.com. includes definitions of each of these non-GAAP financial measures, the company's rationale for the usage and reconciliation of these non-GAAP financial measures to the most recent, most comparable GAAP financial measures. We also use our website to publish other information that may be important to investors, such as investor presentations. We will begin the call by reading the company safe harbor statement under the Private Securities Litigation Reform Act of 1995, All forward-looking statements may be made by the company involve material risk and uncertainties and are subject to change based on factors that may be beyond company's control. Accordingly, the company's future performance and financial results may differ materially from those expressed or implied in such forward-looking statements. Such factors include but not limited to those described in the company's filings with the Securities and Exchange Commission and the Annual Report to Shareholders. The company does not undertake publicity, update or revise its forward-looking statements, even if experience or future changes may make it clear that the projected results expressed or implied therein not be realized. I would now like to turn the call over to Mr. Paul Johymchik, Senior Vice President and Chief Financial Officer. Please go ahead, sir.

Good morning and welcome to American Woodmark's first fiscal quarter conference call. Thank you for taking the time today to participate. Joining me is Scott Culberth, President and CEO. Scott will begin with a review of the quarter, and I'll add additional details regarding our financial performance. After our comments, we'll be happy to answer your questions.

Scott? Thank you, Paul, and thanks to everyone for joining us today for our first fiscal quarter earnings call. Our teams delivered net sales of $459.1 million, representing a decline of 7.9% versus the prior year. This was below our expectations provided during last quarter's call due to weaker demand during the summer in the remodel channel. Year-over-year growth in single-family housing starts have slowed over the past three months, putting downward pressure on cabinet installations in future quarters. The focus remains on future rate cuts from the Fed, which could drive stronger demand in calendar 2025. Our home center customers have noted higher interest rates and macroeconomic pressures leading to weaker spending on projects. This has been more significant for higher-priced discretionary projects like kitchen and bath. We are not experiencing a loss of share with our customers, but we do expect weaker demand versus our expectations at the start of the fiscal year. Our teams remain focused on growing share of our accounts and have realized recent awards in our stock kitchen and bath business that will benefit the remainder of the fiscal year. Our belief is that as interest rates decline, consumer confidence increases, existing home sales increase, and the potential for home projects increases. This should serve as a tailwind for our business in calendar year 25. Our adjusted EBITDA results were $62.9 million, or 13.7% for the quarter. Reported EPS was $1.89. Operational excellence efforts continue to drive progress across the enterprise, but were offset in the quarter by lower volumes. Our cash balance was $89.3 million at the end of the first fiscal quarter, and the company has access to an additional $322.9 million under its revolving credit facility. Leverage was at 1.19 times adjusted EBITDA, and the company repurchased 271,000 shares in the quarter. Our outlook for the industry in fiscal year 25 assumes the repair and remodel market will be down mid-single digits and new construction to be at mid-single digits. Within R&R, larger discretionary projects will trend worse than the overall market and are projected to be down high single digits. As a result of the softer R&R demand and the recently reported slowdown in new construction single family housing starts, our expectation for the company's net sales is being adjusted to a low single digit decrease versus fiscal year 2024. Adjusted EBITDA expectations are targeted in the range of $225 million to $245 million. Our teams continue to execute our strategy that has three main pillars, growth, digital transformation, and platform design, with a number of key accomplishments over the past quarter. Our summer launch has been well received in the market, and conversion activity continues within our distribution business in 1951, and a number of new accounts are being pursued. As previously noted, our teams have won several stock bath and kitchen opportunities over the past quarter. Digital transformation efforts continue with our teams planning for ERP Go Live and our West Coast Made to Stock facility later this fiscal year. Platform design work continues as we ramp our Monterey, Mexico and Hamlet, North Carolina facilities. Mill equipment continues to be installed at both sites and will ramp over the coming months. Automation efforts are progressing in our mill, component, and assembly operations. In closing, I'm proud of what this team accomplished in the first fiscal quarter and look forward to their continuing contributions during fiscal year 25. I'm now going to turn the call back over to Paul for additional details on the financial results for the quarter.